Roommates.com Isn’t Dealing in Illegal Content, Even Though the Ninth Circuit Denied Section 230 Immunity Because It Was

A brief history of this long-running case. Fair housing advocates sued Roommates.com for allowing potential roommates to evaluate each other using allegedly discriminatory criteria in violation of the Fair Housing Act (FHA) and related state claims. In 2004, the district court dismissed Roommates.com based on 47 USC 230. In 2007, the Ninth Circuit reversed the district court in a horribly fractured batch of opinions led by Judge Kozinski. The Ninth Circuit wisely vacated those opinions and heard the case en banc. In 2008, the Ninth Circuit en banc majority, in an opinion written by Judge Kozinski, subsequently reinforced that 47 USC 230 didn’t apply to parts of Roommates.com’s service. The Ninth Circuit en banc majority opinion became the flagship exception to 47 USC 230, but that exception has proven narrow over the past four years; most cases citing Roommates.com rule for the defense.

After the Ninth Circuit en banc ruling, the case remanded to the district court to evaluate the substantive merits of the FHA and related claims (now that the Section 230 immunity was off-the-table). Although the Ninth Circuit en banc majority opinion didn’t conclude that Roommates.com acted illegally, the opinion assumed Roommates.com’s illegality so strongly that, not surprisingly, the district court ruled that Roommates.com violated the FHA and related claims.

The FHA ruling went back to the Ninth Circuit. Last week, the Ninth Circuit ruled–in yet another opinion by Judge Kozinski–decisively that Roommates.com hadn’t acted illegally, i.e., that it hadn’t violated the Fair Housing Act (or California equivalent) because roommates who share a dwelling aren’t covered by the statutes. From a cyberlaw standpoint, the ruling is only mildly interesting.

Much more interesting is this ruling’s implication for 47 USC 230 and the Ninth Circuit’s prior en banc ruling. In his en banc majority opinion, Judge Kozinski offered the following conclusion, which is the most commonly cited holding of this case:

If you don’t encourage illegal content, or design your website to require users to input illegal content, you will be immune.

Well, Judge Kozinski’s latest ruling concluded that Roommates.com wasn’t dealing in illegal content, so it should be immune, right? But Judge Kozinski earlier concluded that Roommates.com didn’t qualify for the immunity because it had been dealing with illegal content. What gives?

It appears that Judge McKeown, in her en banc dissent, predicted this trap:

the question of discrimination has not yet been litigated. In dissenting, I do not condone housing discrimination or endorse unlawful discriminatory roommate selection practices; I simply underscore that the merits of the FHA claim are not before us. However, one would not divine this posture from the majority’s opinion, which is infused with condemnation of Roommate’s users’ practices. To mix and match, as does the majority, the alleged unlawfulness of the information with the question of webhost immunity is to rewrite the statute.

Indeed, one way of interpreting the Ninth Circuit’s sequence of rulings is that, per the en banc ruling, a plaintiff can defeat a 47 USC 230 immunity defense simply by alleging the existence of illegal content (as part of showing the website encouraged/required illegal content), and this allegation works even if the content ultimately isn’t illegal. But this would be a bad policy result–we need the immunity exactly when the plaintiff’s allegation is wrong. We now know Roommates.com deserved to win (either due to the immunity or based on the substantive doctrine), but the immunity would have gotten us to the right result much faster. After all, Roommates got its 47 USC 230 dismissal in the district court EIGHT YEARS AGO. Now, 8 years later, we’ve reached the same result, but the parties have spent enormous amounts of time and money to restore that status quo. As both Judge Kozinski and Judge McKeown acknowledge, the point of the 47 USC 230 immunity is to help defendants save those costs for the defense. By letting the plaintiff’s incorrect allegation trump the immunity, the Roommates.com majority rule has undermined that objective.

[Procedural note #1: it is tempting to criticize Roommates.com’s counsel for pushing the 47 USC 230 immunity ahead of other defenses, but that’s not fair. Putting aside the fact that Roommates.com did advance multiple defenses initially and not just 230, Section 230 should eliminate the defendant’s need to go through a claim’s substantive elements (and all of the discovery associated with it). So it’s a logical litigation strategy to put the Section 230 immunity first. And in fact, Roommates.com got the Section 230 win at the district court, so until the Ninth Circuit coughed up its hairballs, the defense strategy worked well.]

[Procedural note #2: it’s a little harder to be sympathetic to Judge Kozinski. In his defense, as an appellate judge, he deals with the cases as they arrive on his desk. [UPDATE: In the first version of this post, I mistakenly claimed the case was initially dismissed on a motion to dismiss.] However, his en banc opinion was written quite broadly and loosely. If he had any doubts about the legality of Roommates.com’s actions–and the new opinion makes it clear he’s strongly in support of their actions–he could have acknowledged that possibility more clearly rather than writing such a strongly worded opinion based on the presumptive illegality.]

A different way of reading this result is that the latest Ninth Circuit ruling has undermined the en banc ruling. Roommates.com never had illegal content in the first place, so the en banc opinion was based on a factual predicate that wasn’t true. I’ve asked Roommates.com’s counsel about the possibility of asking the Ninth Circuit to vacate the en banc ruling because of this factual predicate problem. I don’t know if such subsequent proceedings are possible, but it would be a big win for 47 USC 230 jurisprudence for the Ninth Circuit to wipe away the en banc opinions. Even though the en banc opinions have produced mostly defense-favorable rulings, wiping them out would clean up some unnecessarily loose and confusing language in the majority opinion as well as cast significant doubt on the few plaintiff-favorable cases that have built on Roommates.com (e.g., Accusearch, NPS, Swift v. Zynga, Jones v. thedirty).